Most consumers have made changes to their lifestyle or finances to cover essential spending in the last month as the soaring cost of living hits home, Which? research reveals.
According to the latest findings from Which?’s consumer insight tracker, pressures on household finances have continued to worsen as millions of people faced significant price hikes to their energy, broadband, mobile, water and council tax bills in April.
Six in 10 (59%) consumers said they had to make an adjustment – such as cutting back on essentials, borrowing from family and friends, taking out loans or credit cards, dipping into savings or overdrafts or selling items – to cover essential spending in the last month.This is a significant increase from 35 per cent in April 2021 and 54 per cent in March 2022.
The most common adjustment was cutting back on essentials such as groceries, school supplies and medicines – with four in 10 (39%) people saying they have done this to make ends meet.
Three in 10 (28%) said they had to dip into their savings to cover everyday costs and seven per cent said they had sold possessions. One in ten (10%) had borrowed from friends and family and 8 per cent had taken out a new credit card or borrowed more on an existing one.
An estimated 2.1 million households missed or defaulted on at least one mortgage, rent, loan, credit card or bill payment in the last month. Rent and household bills were the most common types of missed payment, with six per cent of renters missing their rent payment and five per cent of all consumers saying their household had missed a bill payment.
Missed payments were much more common among consumers on lower incomes. Of those consumers in our survey on an income of up to £21,000, one in ten (11%) reported missing a payment in the last month.
Energy bills were the most commonly reported type of missed household bill (2.2%) – but as Which?’s survey was conducted shortly after the energy price cap increased, the full impact of the price hikes is yet to be seen. Other common types of missed bill were water bills (1.4%), phone bills (1.3%) and broadband bills (1.3%).
More than half (55%) of those who reported missing a bill payment said they had missed more than one – highlighting the extreme pressure that some households are under during the cost of living crisis.
Which?’s research clearly shows the most financially vulnerable are facing difficult financial decisions just to stay afloat. With inflation and price hikes only expected to continue rising in 2022, the government and businesses must take action to support those who could find themselves in a desperate situation as the cost of living crisis continues to worsen.
The government and regulators must ensure people can rely on robust consumer protections that will prevent them from being exploited by businesses – and people should feel confident that existing protections will be enforced. For example, Ofgem must move quickly on its pledge to take tough action against energy suppliers that are charging people too much for direct debits – and send a clear message that this behaviour from businesses is totally unacceptable.
Customers should be able to trust businesses to provide appropriate standards of customer care and support during the cost of living crisis. If a company is hiking bills, then they must provide transparent and clear information for consumers about the increases, how they will be affected and the best deals available for their customers.
Companies should also properly publicise any social tariffs their customers may be eligible for and help those who are struggling to make ends meet.
Which? has launched a new cost of living section on its website to offer consumers practical advice on how to save money on their household bills. The consumer champion has also run a series of cost of living focused episodes on the Which? Money podcast.
Adam French, Which? Consumer Rights Expert, said:
“Our research shows how a relentless cost of living crisis is putting huge pressure on household finances – with six in 10 people saying they’ve had to adjust their finances to help make ends meet in the last month.
“Millions of people faced significant price hikes to their energy, broadband, mobile, water and council tax bills as well as rising food prices this month. With the economic situation only expected to worsen in 2022, the government and businesses must urgently take action to support those who could quickly find themselves in serious financial trouble if things deteriorate further.”
Notes to editors
Consumer Insight Tracker
The Consumer Insight Tracker is an online poll conducted monthly by Yonder on behalf of Which?. It is weighted to be nationally representative with approximately 2,000 respondents per wave.
The survey indicates that between 6.2 per cent and 8.5 per cent of households missed or defaulted on at least one mortgage, rent, loan, credit card or bill repayment in April 2022, with an average estimate of 7.3 per cent.
Based on our survey and the ONS estimate for the number of households in 2020 of 28.1m, Which? estimates that between 1,751,058 and 2,379,348 households missed or defaulted on a housing, utility, loan or credit card bill in the last month in April 2022.
Figure 1: Six in ten consumers made at least one adjustment to cover essential spending in the last month
Source: Which? Consumer Insight Tracker, Online Poll weighted to be nationally representative, approx 2,000 respondents per wave. Adjustments include: cutting back, dipping into savings, borrowing from friends and family, taking out credit cards or loans, selling items, using an overdraft.
Figure 2: The proportion of households missing payments was at 7.3% in April
Source: Which? Consumer Insight Tracker, Online Poll weighted to be nationally representative, approx 2,000 respondents per wave. The chart shows the proportion of consumers who have missed a housing, bill, loan or credit card payment in the last month.
Figure 3: Consumer confidence remains low
Source: Which? Consumer Insight Tracker, online poll weighted to be nationally representative, approx 2,000 respondents per wave.
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